On Thursday, Raymond (NS:RYMD) James raised the stock rating for EverQuote (NASDAQ:EVER) from Outperform to Strong Buy, setting a new price target of $35.00. The upgrade comes despite potential near-term challenges posed by an upcoming FCC (BME:FCC) rule change slated for January 2025, which could impact the company's revenue growth and increase costs.
The company has shown strong momentum with a 49.67% year-to-date return and maintains impressive gross profit margins of nearly 95%. According to InvestingPro analysis, the stock currently appears undervalued based on its Fair Value calculations.
The firm's analyst pointed out that EverQuote has been delivering solid results year-to-date but acknowledged that the stock's recent performance might have been influenced by the pending regulatory change. This change will affect how websites gather consent for outbound phone calls to consumers, potentially affecting around 30% of EverQuote's business. InvestingPro data reveals the company's strong financial health with a "GOOD" overall rating and robust current ratio of 2.33, indicating solid operational stability.
Despite this, the analyst anticipates a surge in demand for EverQuote's leads in the years 2025 and 2026. This projection is based on the expectation that most personal lines insurance companies will significantly boost their advertising budgets to maintain and expand their market share.
The analyst also highlighted that EverQuote's stock is currently trading below the average of its peers in the online marketplace and lead generation sector when considering 2025 estimated Price to Earnings (P/E) and Enterprise Value to Revenue (EV/Revenue) ratios.
Additionally, EverQuote is one of only two stocks within the analyst's coverage trading at a discount to its 200-day moving average (MDA), at approximately 16% below, compared to the peer average which is around a 4% premium. With a market cap of $647.64 million and 12 additional exclusive ProTips available on InvestingPro, investors can access comprehensive analysis including detailed valuation metrics and growth forecasts in the Pro Research Report.
In other recent news, EverQuote has reported robust Q3 2024 financial results, surpassing previous guidance. Total (EPA:TTEF) revenues reached $144.5 million, marking a 163% increase year-over-year, primarily driven by a 200% rise in auto insurance revenue and a 30% increase in home insurance revenue. Needham maintained its Buy rating on EverQuote but lowered the price target to $30 from $38, reflecting the current lower valuations in the financial marketplace. This follows the company's strong Q3 performance, which exceeded both Needham's and the Street's expectations.
Canaccord Genuity also maintained a Buy rating on EverQuote's stock and set a $35.00 price target, following the company's impressive Q3 performance. EverQuote has set Q4 guidance, anticipating over 100% growth, and remains optimistic about long-term growth despite potential impacts of new FCC regulations. These recent developments highlight EverQuote's successful collaborations with large carriers, leading to data-driven pricing changes and new service offerings.
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